Anglo American CEO Says Open to Takeover Offers

Dow Jones subscribers were the first to learn that the chief executive of one of the world’s biggest mining companies, Anglo American PLC, wouldn’t rule out a takeover offer. In an exclusive interview, CEO Mark Cutifani said the prospect of a takeover didn’t scare him. “My job is to create value, however that may be shown,” he said. “Our job is to do a good job with the business, and at the end of the day, if somebody sees value, then there’s a conversation to be had.” Cutifani’s predecessor had rebuffed takeover attempts.

The story as it appeared on Dow Jones:
Sept. 2, 2014 9:30 AM EDT : Anglo American CEO Says “Not Scared” by Takeover Talk

LONDON–The chief executive of Anglo American PLC, one of the world’s largest mining companies, said he won’t pull up the drawbridge if a compelling takeover offer arrives.

“My job is to create value, however that may be shown,” said Mark Cutifani, an industry veteran tasked 15 months ago with turning things around at Anglo after the departure of former chief executive Cynthia Carroll.

“Our job is to do a good job with the business, and at the end of the day, if somebody sees value, then there’s a conversation to be had,” said Mr. Cutifani.

“I’m not anti. I’m very open. I’m not scared by it,” he said in an interview with The Wall Street Journal. But Mr. Cutifani, 56 years old, said his overriding ambition remained transforming Anglo into a top miner in its own right.

“That’s not what we’re setting this business up for,” Mr. Cutifani said, referring to any future deal. In 2009, Anglo-Swiss mining firm Xstrata PLC made an approach that was rebuffed by Ms. Carroll. Since then, Xstrata has been absorbed by Glencore PLC.

Mr. Cutifani’s key aim is to boost Anglo’s return on capital employed to at least 15% in 2016. That measure slipped to 10% in the first half of 2014 from 11% a year earlier.

“It’s an imperative that we have to get to. We’ve got to be doing better than that number,” said Mr. Cutifani. Earlier this year, Anglo said it would sell some of its older, deep-level platinum shafts, a process Mr. Cutifani said would take at least another 18 months.

With assets in commodities ranging from iron ore to platinum and diamonds across several continents, Anglo is one of the world’s most diversified mining companies. But bad bets–including one by Ms. Carroll on a Brazilian iron-ore mine that has run more than $6 billion over budget–have eaten into profits. Anglo’s shares have fallen 55% since early 2011.

Investors have also fretted about Anglo’s exposure to South Africa, where its subsidiary Anglo American Platinum Ltd.–known as Amplats–has been hit by a five-month strike this year.

Mr. Cutifani has aimed to slash Anglo’s costs and put several peripheral assets up for sale. The company’s shares are up 17.5% this year, outperforming both of its bigger rivals, BHP Billiton Ltd. and Rio Tinto PLC.

Amid a global commodities downturn, Rio and BHP have also been selling assets, focusing investment on a smaller universe of commodities and steering away from a diversification model that until recently characterized many of the world’s biggest miners. Mr. Cutifani, however, said he still believes in the diversified-mining model.

“We’re less focused on driving into a favored commodity because in our view, there are so many unpredictable issues,” he said.

“Either the company outperforms under Mark Cutifani’s leadership, and demonstrates the value of tons in the ground, or it fails to do so and is put out of its misery in fairly short order,” said Paul Gait, an analyst at Sanford C. Bernstein.

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